Under Adaptive Expectations, the Short-Term Effect of an Unanticipated Shift

question 57

Multiple Choice

Under adaptive expectations, the short-term effect of an unanticipated shift to a more expansionary macroeconomic policy will be a

• A) temporary reduction in the unemployment rate.
• B) permanent reduction in the unemployment rate.
• C) temporary reduction in the inflation rate.
• D) permanent reduction in the inflation rate.

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process or providing a service.

Production Orders

Instructions or commands to start the manufacture of a certain quantity of a product within a specified timeframe.

Activity Rate

The rate determining the cost allocation in activity-based costing, which distributes overhead expenses to products or services according to particular activities.

Activity-Based Costing

A pricing approach that determines and allocates the expenses of each activity within an organization to all products and services based on their actual usage.